Wal-Mart, Amazon and the Swiss Social Wage

During the editing of Carl Proper’s important article below, we made some formatting and other errors that may have created some confusion. We apologize and hope that all errors have been corrected. We hope you will enjoy this thought provoking article.-Talking Union.

by Carl Proper

Carl Proper

Carl Proper

47 percent of U.S. jobs are ‘at risk’ of being automated in the next 20 years,” say Oxford University Professors Carl Frey and Michael Osborne, including most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labour in production occupations.i

The opportunity is massive,” adds Andrew McAfee, a principal research scientist at the M.I.T. Center for Digital Business. “There are still people who walk around in factories and pick things up in distribution centers and work in the back rooms of grocery stores.”ii

One U.S. CEO, Amazon head Jeff Bezos, is doing his best to seize the “opportunity.” Reaching outside his highly automated “fulfillment centers” – where the remaining human workforce complains of being treated like robots themselvesiii – Bezos proposes to replace UPS delivery people with a fleet of mini-drone helicopters to drop packages on your doorstep, largely untouched by human hands.

Why exploit workers, Bezos appears to believe, if you can just do without them?

There is a lot of evidence that this may indeed be our future.iv

Do organized labor or American workers believe this is the future? Or are we too preoccupied with the threats of the present to develop a vision for a radically different economy? And if we do envision the massive substitution of robots for human workers, for better or worse, do we have a strategy to cope with this world?

In the early 20th century, when the labor power we once took for granted was built, millions of workers were inspired by a vision of a vastly different, socialist future, where workers would not just live better, but would rule. I believe that progressive thinkers and activists today should also sometimes lift our eyes from the daily struggle, so as to imagine and work toward a world where mere survival no longer compels us to sell our labor to the owners of capital. Let the robots work for US.

Is this a crazy dream? A number of Swiss citizens, enough of them to raise the question politically, don’t think so. This winter, the Swiss will vote in a referendum whether the government should send every adult an equal monthly “paycheck” of about $2,800, whether they are employed or not. They believe most people would continue to work, but work more freely, under this new regime. It is an idea other Europeans, and some Americans are considering as well – mostly libertarians up to now, and most, unfortunately, involving a much lower “social wage.”

Maybe Amazon’s robot vision is the future. And if so, as a working class, how long will we continue to seek work from employers who no longer need us, but still want our consumer dollars? Why not, instead, prepare to let robots do the work, and demand a “social wage,” just for breathing? Couldn’t we find better use for our time NOT laboring for The Man, but pursuing superior education for ourselves and our children, working for causes that matter to us, or selling mental or physical products from our own 2-D or 3-D printers — individually or cooperatively produced?

In today’s world of everyday struggle, American workers and organized labor are responding courageously to the brutal destruction of a formerly middle class living standard — fighting for a living minimum wage, sending demands for justice with one-day strikes, and pushing the political system to restore rights taken away at the workplace. In these struggles, the message of organized labor and the Occupy movement continues and will grow.

Capitalism, however, evolves rapidly. So must we. Tomorrow’s struggles are likely to be very different from today’s, and in a growing number of places, tomorrow is already here.

But, before trying to build a highway to the future, let’s retrace the road that got us here. What way is history moving? And what are the realities beneath our ground?..

Back in 1960, as Harold Meyerson writes, “America’s three largest employers were high-wage unionized manufacturers or utilities: General Motors, AT&T, and Ford.”v They paid their production workers a living wage, also providing “Cadillac” health insurance and a defined benefit pension.

Families supported by these jobs had little need for the extensive government benefits provided today, except for Social Security as an addition to their union pensions. By 1965, President Lyndon Johnson and many others even saw the potential for ending poverty in America, as we launched Medicare and Medicaid, Civil Rights reform and a variety of anti-poverty programs.

But by then, other global powers, whose economies had been crushed by World War II, had largely rebuilt, returned to competition, and begun producing quality products while paying lower wages. The world had changed radically beneath American Labor’s feet – and we reacted slowly and inadequately to the challenge. New “Asian tigers” and Latin American sweatshop “opportunities” entered the global economy. U.S. manufacturers were pushed back, and a “Rust Belt” grew. Unable or unwilling to compete on quality or service, they turned to a neoliberal, global sweatshop strategy of their own. As they broke unions, and sent the formerly best-paying jobs to low-wage regions or countries, a new economic model developed, based on contingent and low-wage employment, and on the spread of poverty, even for the employed, even here. For the most part, we did not envision the new world that was coming.

U.S. retailers like Wal-Mart, increasingly selling goods made elsewhere, displaced manufacturers as the dominant employers. vi

Having come of age in the South during organized labor’s decline, Wal-Mart founder Sam Walton felt free from the start to pay his service employees the minimum wage, and sometimes less, even as he – at first – promoted “made in USA” production. Eventually, as Walton and his corporate descendants added innovative logistics to low-cost sales, Wal-Mart acquired unprecedented market power. With their huge volume, they demoted manufacturers to lowly “supplier” status, and demanded they shift production to overseas where workers were paid virtually nothing by U.S. standards. Their growing masses of U.S. warehouse and sales employees were eventually granted a substandard, though legal wage, and nominal, though substandard benefits. As for the displaced U.S. manufacturing workers, we never developed an effective global response to that knockout punch.

But there was a weakness in the new Wal-Mart economy. Without a living wage, U.S. workers as a whole were unable to purchase their own output.Government subsidies were required. Even Republicans like President Nixon or economist Milton Friedman saw the need to supplement a living standard base on poverty wages and no (or inadequate) health insurance. They displayed political caution in moving only gradually toward their long-term vision of a uniform global wage level, even in the U.S., but far below previous American standards. Indeed, as Jaron Lanier points out in his recent book, “Who Owns the Future?,”viiover time Wal-Mart’s low-wage strategy cost competitors and suppliers hundreds of thousands of jobs, thus gradually impoverishing its own customer base.” viiiThat is, to the extent dominant, pattern-setting employers, like Wal-Mart or McDonald’s, paid their employees less than the full value of their work, they depressed the whole economy and their own sales as well. Sophisticated conservatives soon recognized the need to prop up the market for Wal-Mart and other retailers’ products, by expanding public income and benefit subsidies. (Less savvy reactionaries, like the Tea Party, are radically opposed to the corporate conservatives’ strategy.)

To address capitalism’s need for income subsidies, and facilitate the shift to a neoliberal economy, President Nixon proposed a “negative income tax,” essentially a federal supplement for low wages, as well as a version of national health insurance to lift this burden from employers’ backs. The insurance proposal was deemed not quite good enough by the AFL-CIO in that day, and so failed in Congress, but the tax supplement – an “Earned Income Tax Credit” (EITC) became law in 1975, and was significantly improved in the 1990’s. Eventually, food stamps and other government supplements and protections were added. National health insurance, with mixed support from labor and major employers, and opposition from a mostly Southern-based ideological right, is only now taking effect.

Wal-Mart was the new corporate model. While avoiding the living wage that had been standard in an earlier generation, they directly and indirectly employed many humans – often on a part-time basis. And, like fellow mass-market retailer McDonald’s, they encouraged their employees to take advantage of government benefits for the underpaid, or occasionally unemployed.

Confronting these low-wage, goods-supplying behemoths, Unions like SEIU and UFCW are now organizing (dues-free) workers who demand a return to much higher minimum wages, and to employer-paid benefits adequate to cover their actual needs without federal wage and benefit support.

Right-wing economists, like Gregory Mankiwix , the chairman of the Council of Economic Advisers under President George W. Bush, while recognizing the need to put money in consumers’ pockets, generally prefer expanding the EITC, rather than raising the minimum wage. This “negative income tax” distributes the cost of wage supplements to the whole population, whereas the cost of a higher minimum wage would fall directly on the offending employers. While many conservatives, including defeated Presidential candidate Mitt Romney, grumble at the unfair “tax” on employers represented by either the EITC or the minimum wage, they mostly lobby to have the tax fall, like Shakespeare’s “gentle rain from heaven…on the just, and on the unjust”.

Orrganized labor should not fail to recognize what even informed reactionaries implicitly acknowledge: if the workforce is paid — whether by their employers or by the government — too much less than the actual value of their work, corporate profits will not be REALIZED in the marketplace, and the economy will suffer

But while labor struggles to return responsibility for workers’ full compensation back to their employers, a whole new front is opening up: a future for which we must prepare.

Amazon is the new model of online, speedy and low-priced retail. Starting a business in the internet / smart technology age, a world in which the demands of organized labor can often be ignored, CEO Bezos often faces charges of overworking his employees, and of warehouse conditions more congenial to robots than to humans requiring warmth, air and occasional restx — but he has a solution for that.

While sweaty masses of humans swarm throughout Wal-Mart stores, warehouses and the global production facilities they control, Amazon’s massive “fulfillment centers” (where orders, not people, are “fulfilled,” or shipped) are increasingly human-free – and heli-drones are on the way. Bezos’ automation-based cost control appears fiscally superior to Wal-Mart’s. His stated goal, which Wal-Mart has surely noted, is to become the world’s ONLY retailer – and perhaps the first retailer to employ only bean-counters and robot-installers / controllers / repair-folks – with no need for anyone to turn the lights on or off during the course of the twenty-four hour shipping day.

Other employers may not be far behind.

Google,over the last half-year… has quietly acquired seven technology companies in an effort to create a new generation of robots. The engineer heading the effort is Andy Rubin, the man who built Google’s Android software into the world’s dominant force in smartphones.” xi

Even as SEIU organizes McDonald’s service workers to demand a living wage, McDonald’s is installing 7,000 new touch-screen kiosks in its European stores. In the foreseeable future, little human contact will be required to order burgers and fries.xii

mcD_kiosk

McDonald’s shows off a touch-screen kiosk for ordering meals, installed in France in 2009. (Credit: McDonald’s Europe)

In effect, Jeff Bezos and technology leaders like Google engineer Andy Rubin, foresee a future in which most of today’s retail / production workforce are “dead men (and women) walking.”

Our labor will not be needed, the Amazon/Google coterie believes: there’s a robot for that.

While past technological revolutions led to new jobs, as they destroyed the old, there is no assurance this pattern will be repeated. We can no more close our eyes to a future that is evident to technology gurus, than we can ignore the realities and predictions of global climate change, or the evidence of evolution. Science and technology are changing, and will continue to radically change our world, and we must adapt or die. We must shed any illusions that tomorrow’s economy will look like today’s.

The new Amazon economy presents a conundrum to organized Labor. We have always depended for our power on leverage gained from capital needing our LABOR. Perhaps, we may say, the recent growth of unemployment and long-term unemployment is only cyclical, and millions of new jobs will appear in a robot economy. But perhaps we are witnessing, instead, the beginning of a very different world economic order, based on extreme automation of production, delivery and most repetitive services – and on corporate employment for only a minority of the adult population.

How then will the rest of us live? And how will representatives of the newly unemployed or self-employed obtain leverage to make demands and negotiate terms of living, rather than just working?

The “Swiss solution” is one possible aspect strategy for an automated future.

Some economists, libertarians and conservatives – and perhaps the liberal Swiss and other Europeans – now believe we must simplify the subsidy of consumption, replacing multiple government programs, and the bureaucracies that administer them, with a single check, while allowing the replacement of workers with robots and other automated equipment. Libertarians and conservatives, unsurprisingly, tend to favor a much lower social wage than the Swiss referendum will suggest.

As we know, conservatives love vouchers and hate government programs. There will, as always, be a lot to argue about, social wage or no. But they are looking in an interesting direction.

The Swiss referendum question combines the virtue of simplicity with an initially adequate social wage: a flat monthly amount for all, enough to live on, but low enough to encourage most people to seek additional income from other sources. It assumes that most people will continue to work, but perhaps not full time, and not necessarily for corporate employers — and to pay taxes. Almost certainly, if such a step is to be considered in the U.S., we would expect it to phase in gradually, probably by shifting costs from existing programs — expanding the EITC, for example — and taxing the production of robots. A generation of political conflict could be part of the package.

The question of how millions of displaced workers might use more free time also requires exploration. Utopian writers have thought about this possibility for more than one hundred years. But the rise of robotic technology and the decline of sustaining employment in advanced economies urgently raises the issue again in our time. We should not wait for millions of jobs to disappear one industry at a time before developing a response that recognizes the inevitable (or probable) and leverages the possible. How can we respond as a class, and globally – rather than be played off one more time, against each other?

If the Swiss should respond positively to the referendum, we will have an extraordinary learning opportunity, but the question is on our table regardless.

The opportunities and dangers are global and serious. What is our plan?

 Carl Proper was a working member, then staff member of the International Ladies’ Garment Workers’ Union, then UNITE, then UNITE HERE from 1972-2011. He is now retired.Carl Proper was a working member, then staff member of the International Ladies’ Garment Workers’ Union, then UNITE, then UNITE HERE from 1972-2011. He is now retired. He blogs at CarlProper.com

 Notes

ii ibid

iii As an Amazon employee in a recent strike in Germany explains, “the workers are treated more as robots than human” Alison Kilkenny, “Hundreds of German Workers at Amazon Walk Off the Job,” The Nation, December 16, 2013

iv See some suggested sources below.

vHarold Meyerson, “the Forty Year Slump”, American Prospect, Sep-Oct 2013

vi See Harold Meyerson, op cit, “In 2013, America’s three largest private-sector employers are all low-wage retailers: Wal-Mart, Yum! Brands (which owns Taco Bell, Pizza Hut, and Kentucky Fried Chicken) and McDonald’s.”

vii Jaron Lanier, Who Owns the Future?, Simon and Shuster, 2013

viii Cited in “Will Digital Networks Ruin Us?” Joe Nocera, NY Times, JAN. 6, 2014

ixN. Gregory Mankiw, Help the Working Poor, But Share the Burden, New York Times, January 4, 2014

x As an Amazon employee in a recent strike in Germany explains,“the workers are treated more as robots than human” Alison Kilkenny, “Hundreds of German Workers at Amazon Walk Off the Job,” The Nation, December 16, 2013 (same note as note 3)

xiGoogle Puts Money on Robots, Using the Man Behind Android,” JOHN MARKOFF, New York Times, December 4, 2013

xiihttp://news.cnet.com/mcdonalds-hires-7000-touch-screen-cashiers/8301-17938_105-20063732-1.htmlMcDonald’s hires 7,000 touch-screen cashiers

Other readings

BHL’s & UBI’s, By Jessica Flanigan, April 30, 2012; http://bleedingheartlibertarians.com/2012/04/bhls-ubis/

Eight ways robots stole our jobs in 2013”, By Lydia DePillisWonkblog, Washington Post, December 23, 2013

Giving All Americans a Basic Income Would End Poverty,”Danny Vinik, http://www.slate.com/blogs/business_insider/2013/11/17/american_basic_income_an_end_to_poverty.html

How to Cut the Poverty Rate in Half (It’s Easy)”.Matt Bruenig and Elizabeth Stoker, Atlantic Magazine, Oct 29 2013, http://www.theatlantic.com/business/archive/2013/10/how-to-cut-the-poverty-rate-in-half-its-easy/280971/

Hundreds of German Workers at Amazon Walk Off the Job,” The Nation, Allison Kilkenny on December 16, 2013

Swiss to vote on 2,500 franc basic income for every adult”, Reuters, Berne, Oct 4, 2013

Rethinking the Idea of a Basic Income for All”, Bruce Bartlett, NY Times Economix blog, December 10, 2013

Welfare Benefits for Big Business”, CASEY B. MULLIGAN, NY Times Economix blog, December 25, 2013

“Why the future doesn’t need us,” Bill Joy, Wired, 1993

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: